1. Rising "Real World" Inflation
The Federal Reserve and the U.S. Government's Consumer
Price Index report inflation at 2-3% a year, yet common sense says real
world inflation is likely twice that amount.
When you factor in monetary inflation (printing money), asset
inflation (stocks and housing) and price inflation (cost of living) it's
clear that inflation is rising much faster.
Gold and U.S. rare coins historically have an excellent track record as inflation hedges.
"Inflation is the one form of taxation that can be imposed without legislation," said economist Milton Friedman.
2. Rising Geopolitical Uncertainty
Since September 11, 2001 the world has increasingly become
an ideological, political and economic battlefield. The threat of a
terrorist attack is present every day.
"Iran, Iraq, Palestine, Afghanistan and Syria are volatile and
potentially explosive... any trigger event could send both gold and oil
prices soaring," say the Aden Sisters.
Owning portable, liquid and universally accepted wealth is
highly sought after in a crisis. Gold and rare coins offer the safest of
havens during global uncertainties.
Institutional and individual investors are now seeking a
perfect hedge of protection, liquidity and growth potential, along with
privacy of ownership.
3. Increase in Internet Trading
The educational and entrepreneurial impact of the Internet
has dramatically changed the coin market in the last few years, both for
the better and for the worse.
Buying any rare collectible item from an unknown source is not
without risks, such as buying counterfeit or stolen coins or never
receiving any coins at all. The greatest risk is inherent in buying any "sight unseen"
coin. It could easily be overpriced unless it is a "sight seen" coin
examined by professionals.
4. A Falling U.S. Dollar
Gold is sometimes referred to as the 'anti-dollar' because it is a perfect hedge against a falling dollar.
The dollar has fallen 40% since 2001 and 95% since the 1950s. Shocking, yet few Americans understand why. Smart investors are moving in droves out of U.S. dollars and
into foreign currencies, commodities and gold. Even central banks are
divesting dollars.
The U.S. now borrows $2.5b a day! Devaluing the dollar is one of the ways the market corrects rising U.S. deficits. The world's confidence in America's ability to manage our trillions in debt is fading fast.
Auction Web sites offer significant risks for the buyer but
also offer a new market for sellers; helpful if you didn't buy coins
from a dealer who will repurchase them.
5. Growing Commodity Demand
A secular bull market in gold, silver and commodities began
in 2001, which has driven oil prices up from $25 a barrel to over $80
and pushed gold prices up fourfold.
According to industry experts, a typical "secular" (or
long-term) bull market runs 18 to 23 years. Using 2001 as a starting
date, this trend should continue until 2019-2024.
During the last major bull market, U.S. rare coins outperformed
bullion dramatically, but price increases often lagged behind bullion
price movements. "The commodities 'supercycle' isn't over and prices may rise
because of production shortages next year," says Morgan Stanley, the
world's largest securities firm
6. The Popularity of ETFs (Electronic Traded Funds)
A gold or silver ETF is a security backed up by allocated
gold held in a vault on behalf of investors and are sold at all major
brokerages.
Gold bullion placed in ETFs has been one of the fastest growing
niches in the gold rush despite growing concerns over fund
transparency.
ETFs have siphoned off some of the new investment money coming
into the market, presenting an excellent buying opportunity for U.S.
rare coins. ETFs are not a replacement for holding physical gold or coins in a well diversified portfolio.
7. Growing Interest in Coin Collecting
The U.S. Mint has heavily promoted modern coin collecting
since 2000 with its Statehood Quarter program; adding 140 million new
collectors to the market.
In 2006 the U.S. Mint released its first 24-karat gold coin,
the American Buffalo. U.S. American Eagle Gold, Silver and Platinum
coins are allowed in a precious metal IRA.
In 2007, the Mint began issuing new Presidential $1 coins it
hopes will "mint a new generation of amateur numismatists." These new
coins may never be rare but national promotion by the Mint still has a
positive effect on the coin market.
